China focuses on stable job market to maintain growth

International Monetary Fund had predicted that China’s economy would grow by 6.6% in 2016. And the economists polled by Reuters had anticipated a growth rate of 6.6 percent. But China’s economy narrowly beat estimates with a 6.7 percent expansion on-year in the three months through June, as a string of stimulus measures from the government and the central bank helped shore up demand.
The headline figure from the National Bureau of Statistics was steady from the previous quarter’s 6.7 percent pace. Second quarter Gross Domestic Product (GDP) was up 1.8 percent from the first quarter.
The Chinese government is aiming for growth of 6.5 to 7 percent this year, a slower pace than what the world’s second-largest economy had got accustomed to in the past two decades.
China’s economy is gradually transitioning to a greater reliance on consumption. It is against the previous emphasis on manufacturing but the transformation hasn’t been all smooth-sailing.
The country’s second quarter GDP figure was not unexpected, as China has been careful to prep up market for further signs of a gradual deceleration.
Chinese premier Li Keqiang said that the Chinese economy is stable and the economy would show continued steady development.
Although the growth is shade better than expected in the second quarter, but it has been largely driven by government stimulus rather than the private sector.
The first half fixed asset investment grew 9 percent from a year ago, but private sector fixed-asset investment grew just 2.8 percent in same period, down from 3.9 percent growth in the first five months, indicating headwinds from slowing exports and macroeconomic jitters.
But the surging stimulus-linked investment by state firms appears to have compensated for the private sector’s unwillingness to invest.
The economy seemed to be holding up well nonetheless, with growth evenly spread between various sectors.
The central bank has lowered banks’ reserve requirements as well as borrowing rates, while the government has also boosted spending to avert a sharper slump.
Figures released separately showed industrial production in June rose 6.2 percent from a year ago, while retail sales rose 10.6 percent.
The move will help bring China’s calculations for the value of its goods and services more in line with global standards set by the United Nations and other world organizations, amid widespread investor skepticism about the accuracy of the country’s official data.
Economists have long disputed the accuracy of China’s official economic data, but agree its economy has steadily slowed since growth above 10 percent was reported in 2010.
This year and last, global markets have been highly sensitive to hints that China’s slowdown is worsening, contributing to a major equity rout in January.
But the top economist at the China’s central bank’s research bureau says that country’s sluggish growth in money supply hasn’t affected the economy and the nation’s fundamentals support a stable foreign-exchange rate.
The country’s stabilizing hoard of foreign reserves, which were little changed at $3.201 trillion in July from the previous month, signal the exchange rate is near equilibrium.
On the other hand China’s leaders plan to underpin demand with fiscal support and view interest rates as being at ‘appropriate’ levels, according to glimpses of their thinking seen in the IMF’s yearly review of the economy.
China’s economy will probably grow 6.5 percent in 2016 and 6.3 percent in 2017, according to estimates compiled by Bloomberg.